Cost-cutting measures with layoffs, cleansing of the customer portfolio, a profit slump, and the cancellation of bonuses: After the disastrous year of 2024, VP Bank aims to grow and increase revenue in the current year.
No, VP Bank cannot and does not want to be satisfied with the results of the 2024 financial year. Group profit shrank by 58 percent to just 18,5 million francs, and even when measuring only operational performance (excluding one-time expenses), there was still a decline of 37 percent.
«VP Bank can do more,» promised Chairman of the Board of Directors Stephan Zimmermann at the press conference on Thursday in Zurich. At the same time, he acknowledged that the cost-cutting measures announced in August 2024 were «drastic but necessary.»
Waiver of Bonuses for Executive Management
CEO Urs Monstein made it clear that he is not satisfied with an annual profit below 20 million francs. «Our cost-income ratio of 90 percent is far too high.» This also has consequences for him and the executive management. They are waiving their bonuses for the 2024 financial year.
In response to a query from finews.com, Monstein explained that bonuses for the second management level had also been cut by half. «This way, we have sufficient funds in the pool to reward outstanding performances by other employees.»
Completion of the Lengthy Russia-Account Cleanup
A major issue that was largely resolved with the 2024 financial results was the cleansing of customer relationships with Russian connections. Until 2022, the Russian business was a target market for VP Bank, particularly for its Zurich branch. Now, the bank reports another round of «forced outflows» (i.e., bank-terminated customer relationships) amounting to 700 million francs. This also includes other clients who did not meet documentation requirements.
Additionally, accounts with funds exceeding 500 million francs, which had not yet been fully processed, were transferred to an «exit book.» Monstein explained that the process took so long due to continuously tightening sanctions, particularly from the U.S. Office of Foreign Assets Control (OFAC).
«From today's perspective, the likelihood of further outflows related to Russian sanctions is very low.» Monstein also noted that clients who were dropped by VP Bank often found other banks. «There are gray areas in assessments, and apparently, others are less strict than we are.»
Russian Impact on Commission Business
This cleansing process also affected VP Bank’s commission business. Unlike most other banks, the Liechtenstein-based firm could not increase its earnings in this area (-0,6 percent), as the higher-margin private banking sector declined. According to Monstein, this was partly due to the forced terminations.
Another atypical development was the significant shrinkage of the bank’s balance sheet (-7,1 percent to 10,6 billion francs). Monstein explained this by stating that customers shifted deposits into securities due to attractive interest rates.
The CEO also confirmed that an enforcement proceeding by the Swiss Financial Market Supervisory Authority (Finma) against the bank is still ongoing. «It concerns a customer relationship that was already terminated in 2020. I cannot say more on this matter.»
Revenue Growth and New Financial Targets
While 2024 focused on cost reductions, VP Bank aims to increase revenue in 2025. The bank will concentrate on its strengths in its operating regions (Vaduz, Zurich, Luxembourg, Singapore, and the Virgin Islands) and launch growth initiatives. Additionally, the cost-saving measures are expected to take full effect this year.
The cost-income ratio is to be «sustainably reduced to a competitive level.» Net new money and revenue are expected to grow annually by 4 and 4–6 percent, respectively, while the core capital ratio (Tier 1 ratio, currently 25,9 percent) should remain above 20 percent.
«We Deliver What We Announce»
«What we announced in 2024, we have delivered. And we will also deliver what we are now announcing,» Monstein pledged.
Due to the resignations of Ursula Lang and Beat Graf from the Board of Directors, two new members will be proposed at the General Meeting on April 25. These are Stephan Ochsner, representing the Fürstlicher Kommerzienrat Guido Feger Foundation, and Barbara Ofner. This foundation is VP Bank’s main shareholder, holding 23 percent of the capital and 46,6 percent of the voting rights.
The two new members of the Board of Directors: Stephan Ochsner and Barbara Ofner. (Image: VP Bank)
Two New Board Members
Ochsner is a lawyer and owner of Ochsner Consulting Establishment and Ochsner Law. His previous professional positions include Kaiser Partner, the Liechtenstein Financial Market Authority (where he served as CEO), the Liechtenstein national administration, Redsafe Bank, and Graubündner Kantonalbank.
Ofner is also a lawyer and works as an independent consultant on regulatory, compliance, and governance matters, as well as a lecturer at universities of applied sciences. She previously worked for KPMG, Landolt & Cie, Ernst & Young, UBS, SG Bank Rüegg, and the Canton of Aargau. She also serves on the board of the Basellandschaftliche Kantonalbank.
